Grok gets a boost: xAI secures $10 billion for AI expansion

xAI, founded by Elon Musk, has secured $10 billion in fresh funding to strengthen its position in the competitive AI landscape. The investment consists of $5 billion in secured loans arranged by Morgan Stanley and a further $5 billion in strategic equity investment.

Morgan Stanley announced the deal on Monday, noting that global investors oversubscribed the debt offering. The firm described the transaction as a strong show of confidence in xAI’s long-term mission to accelerate scientific discovery and deepen humanity’s understanding of the universe.

The newly raised capital will support xAI’s development of a large-scale data centre and continued improvements to its flagship Grok platform. Grok is a conversational AI assistant integrated into Musk’s social media platform, X (formerly Twitter), and is designed to rival systems from OpenAI, Google, and Anthropic.

Morgan Stanley highlighted that the funding structure—blending debt and equity—lowers xAI’s cost of capital and provides access to a broader pool of long-term funding. The firm also said the financing gives xAI greater flexibility as it scales its infrastructure and operations.

xAI has grown rapidly since its launch, raising $6 billion in a Series B round last year, which valued the company at approximately $24 billion. The additional $10 billion signals growing ambition as it prepares to compete with the most prominent players in AI development.

The Grok platform differentiates itself through its real-time access to social media content and a more informal tone, positioning it as a potentially unique alternative in the generative AI space. With expanded funding, xAI is expected to further invest in data training, hardware, and software refinement.

The funding boost comes as rivals also raise capital to stay ahead in the AI race. In March, OpenAI announced a record-setting $40 billion round led by SoftBank, with Microsoft, Altimeter, and Thrive also participating. The round valued OpenAI at $300 billion post-money.

OpenAI said the funds would allow it to enhance research, expand computing power, and improve products like ChatGPT, now used by over 500 million people weekly. Other firms, including Google and Meta, are also increasing investments in pursuit of artificial general intelligence (AGI).

As the battle to dominate AI intensifies, xAI’s latest funding round may mark a turning point, with the firm now better equipped to compete for market share, talent, and technological breakthroughs in an increasingly crowded field.

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